SA economy slowing down
Thématique :
sud afrique
By Christy van der Merwe, Engineering News, 8 Nov 07
The South African economy has shown the first signs of a slower growth momentum, the Bureau for Economic Research (BER) indicated on Thursday.
The BER forecast that growth would slow to 4,5% next year, before re-accelerating in 2009.
However, it added that a 5% growth rate for the South African economy in 2007 remained "in the bag".
The slowdown has been attributed to a number of shocks that the economy had to absorb recently, namely, the public sector industry-wide labour strikes, which took place in the third quarter, the global financial turbulence sparked by the US sub-prime mortgage crisis, and the continued deterioration in the domestic inflation and interest rate trajectories.
The Business Confidence Index had declined 8 index points and the BER stated that significant declines such as this have, in the past, consistently indicated slower economic growth.
The BER added that there was continued evidence of resilience in the consumer sector, and added that the slowdown would be moderate and would likely be considered a "breather" in the historical business cycle upswing that South Africa has experienced over the past eight years.
In its baseline forecast, the BER argued that local interest rates have peaked and inflation would be driven down, back to within the target range during 2008. Robust fixed investment spending, and associated employment creation, would ensure resilience in real consumer spending, as well as the sustained growth of exports.
"The risk is that the global real economic conditions deteriorate more severely, led by a US recession. Commodity prices would decline and domestic inflation risks and expectations unravel as the rand comes under more severe pressure, which would send interest rates even higher, and in turn, lead to a harder economic landing," cautioned the bureau.
The South African economy has shown the first signs of a slower growth momentum, the Bureau for Economic Research (BER) indicated on Thursday.
The BER forecast that growth would slow to 4,5% next year, before re-accelerating in 2009.
However, it added that a 5% growth rate for the South African economy in 2007 remained "in the bag".
The slowdown has been attributed to a number of shocks that the economy had to absorb recently, namely, the public sector industry-wide labour strikes, which took place in the third quarter, the global financial turbulence sparked by the US sub-prime mortgage crisis, and the continued deterioration in the domestic inflation and interest rate trajectories.
The Business Confidence Index had declined 8 index points and the BER stated that significant declines such as this have, in the past, consistently indicated slower economic growth.
The BER added that there was continued evidence of resilience in the consumer sector, and added that the slowdown would be moderate and would likely be considered a "breather" in the historical business cycle upswing that South Africa has experienced over the past eight years.
In its baseline forecast, the BER argued that local interest rates have peaked and inflation would be driven down, back to within the target range during 2008. Robust fixed investment spending, and associated employment creation, would ensure resilience in real consumer spending, as well as the sustained growth of exports.
"The risk is that the global real economic conditions deteriorate more severely, led by a US recession. Commodity prices would decline and domestic inflation risks and expectations unravel as the rand comes under more severe pressure, which would send interest rates even higher, and in turn, lead to a harder economic landing," cautioned the bureau.
